The ability to selectively control the differentiation of neural stem cells (NSCs) into cholinergic neurons in vivo would be an important step toward cell replacement therapy. First, green fluorescent protein (GFP)-NSCs were induced to differentiate into cholinergic neuron-like cells (CNLs) with retinoic acid (RA) pre-induction followed by nerve growth factor (NGF) induction. Then, these CNLs were transplanted into bilateral hippocampus of APP/PS1 transgenic mice. Behavioral parameters showed by Morris water maze (MWM) tests and the percentages of GFP-labeled cholinergic neurons of CNL transplanted mice were compared with those of controls. Brain levels of choline acetyltransferase (ChAT) mRNA and proteins were analyzed by quantitative real-time PCR and Western blotting, ChAT activity and acetylcholine (ACh) concentration were also evaluated by ChAT activity and ACh concentration assay kits. Immunofluorescence analysis showed that 80.3±1.5% NSCs differentiated into CNLs after RA pre-induction followed by NGF induction in vitro. Three months after transplantation, 82.4±6.3% CNLs differentiated into cholinergic neurons in vivo. APP/PS1 mice transplanted with CNLs showed a significant improvement in learning and memory ability compared with control groups at different time points. Furthermore, CNLs transplantation dramatically increased in the expressions of ChAT mRNA and protein, as well ChAT activity and ACh concentration in APP/PS1 mice. Our findings support the prospect of using NSC-derived CNLs in developing therapies for Alzheimer's disease (AD).